How can Multinational Businesses manage their workforce globally through IHRM?

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What is International Human Resource Management (IHRM)?

International Human Resource Management (IHRM) simply means that it surrounds all HR practices that helps to manage a global workforce. The responsibility of international HR professionals within multinational corporation are talent management that includes recruitment, expatriation and repatriation, training and development and compensation. 

IHRM specialists are needed to deal with recruitment, onboarding and managing global dispersed employees in multinational corporations. Moreover, IHRM also deals with at least three types of employees according to the origin of the country. 

They are:-

  1. Parent Country Nationals (PCNs)- Employees who belong to the country in which the company's headquarters are located.
  2. Host Country Nationals (HCNs)- Employees who belong the country in which the company has its subsidiaries.
  3. Third Country Nationals (TCNs)- Employees who work in the host country but are not nationals of either parent or host country nationals.

HRM vs IHRM

Domestic HRM means it is the management of human resources that is in control locally in a business's home country. Whereas IHRM means it the management of human resource globally. 

To elaborate further on the difference, HRM functions are involved in both domestic HRM and IHRM. As mentioned above they include, talent management, performance appraisal, training and development, compensation. In IHRM, managers have to deal with critical and unique issues that occur from internationalization. This scope is beyond domestic HRM and includes complexities of staff management beyond the country.   

What are the objectives for IHRM?

The HRM objectives include supporting employees to reach their targets, hiring the right talent, implementing organizational goal, communicating staff effectively and upholding business's ethical and legal responsibilities. 

These objectives are same for IHRM, but extra challenges that outline specific objectives maybe added from managing workforce globally. They include recruitment and retaining staff with a global mindset and to achieve business goals. 

Another objective would be training and developing staff with hard and soft skills in which cross-cultural and local market training is important for emigrant workers. International HR managers must also align with international laws of each country the company operates in. 

What are the several types of approaches to IHRM?

There are four approaches of IHRM, they include: -

  1. Ethnocentric Approach - This approach is when the management of the parent company approaches to manage things that is tested in practice and that it should follow in other units of the organization in other countries. Major decision makings are done by the parent company.
  2. Poly-centric Approach - Poly-centric approach is where multinational corporations look for the importance of host country and governing laws. Management style in the parent country should align and suit the local culture of the people in the host country. Decision- making is highly decentralized and local management makes all the decisions.
  3. Regino-centric Approach -This approach is where multinational corporations believe in different aspects of culture from country to country. Multinational businesses will arrange to set up regional offices to manage the regions in all countries so that organizations can build up strong innovations and creativity due to workforce diversity.
  4. Geo-centric Approach - Management uses the best strength in the organization that they could get without considering geographical regions. Further, organizations have right flexibility and create culture and boundaries that make them effective and unique. This approach is highly professional and will need competent leaders. 

How important is IHRM?

The importance of IHRM is huge as it is easy to manage multinational workforce. Moreover, multinational corporations and international businesses maintain global workforce without their physical presence through digitalization which has made everything possible. 

What are the Pros and Cons for IHRM?

There are a few advantages to approach IHRM, they are: -

  1. IHRM happens within a culture appropriate to workforce and customers.
  2. Cohesive, fostering and group identity in the group within subsidiary.
  3. Groups in the subsidiary can gain in status.
There are a few disadvantages to approach IHRM, they are: -
  1. IHRM has the tendency to become exclusive.
  2. There will a loss in central control and higher administrative costs.
  3. There will be a loss in organizational identity and control.
In my opinion, IHRM plays a crucial role in ensuring success of multinational companies due to the involvement of developing strategies to effectively coordinate and manage the work diversity in across different countries and culture.

For more information, watch the video below on IHRM challenges and trends: -



References

B, S. (2019) International human resource management: Meaning, need, challenges and issues, Essays, Research Papers and Articles on Business Management. Available at: https://www.businessmanagementideas.com/international-human-resource-management/international-human-resource-management/19613 (Accessed: April 14, 2023).

FZE, B.B. (2023) Definition of International Human Resource Management (IHRM), UKEssays. UK Essays. Available at: https://www.ukessays.com/essays/management/definition-of-international-human-resource-management-management-essay.php (Accessed: April 14, 2023).

Jawed, U. (2023) Understanding International Human Resource Management, Multiplier. Available at: https://www.usemultiplier.com/global-human-resource-management (Accessed: April 14, 2023).

techthug99 (2023) What is International Human Resource Management (IHRM)? approaches, dimensions, activities, challenges, Geektonight. Available at: https://www.geektonight.com/international-human-resource-management/ (Accessed: April 14, 2023).

Tracy H (2018) IHRM trends and future challenges, YouTube. YouTube. Available at: https://www.youtube.com/watch?v=Ua1rwR7LJ3M (Accessed: April 14, 2023).

What is international human resource management? (full guide) (2022) Global Online Courses at Manchester Metropolitan University. Available at: https://globalonline.mmu.ac.uk/news-and-events/what-is-international-human-resource-management (Accessed: April 14, 2023).

Comments

  1. Lalindu WijesingheApril 16, 2023 at 9:53 PM

    very interesting article, the relationship between multinational companies and international human resource management is one of mutual dependence and collaboration, with IHRM serving as a critical function that enables MNCs to effectively manage their global operations and compete in the international marketplace. Well done.

    ReplyDelete
  2. Iresha UdariApril 17, 2023 at 3:43 AM

    Thank you Lalindu on your valuable comment.

    ReplyDelete
  3. Tharanga WanigasundaraApril 19, 2023 at 2:33 AM

    Multinational businesses can manage their workforce globally through international HRM. IHRM involves the management of human resources across different countries and cultures, and it plays a crucial role in the success of multinational organizations. Well done.

    ReplyDelete
  4. Gamini EdirisingheApril 19, 2023 at 5:59 PM

    Multinational businesses are companies that operate in multiple countries and have a workforce that is spread out globally. In order to effectively manage their workforce in different parts of the world, these companies use International Human Resource Management (IHRM) strategies and practices.

    IHRM involves the coordination of human resource policies and practices across different countries, while also taking into account the cultural, legal, and economic differences of each location. It includes activities such as recruitment and selection, training and development, compensation and benefits, and performance management.

    By using IHRM, multinational businesses can ensure that their workforce is properly aligned with the company's objectives, and that employees are able to perform at their best, regardless of their location. This approach can also help to create a sense of unity and consistency across the organization, while also accommodating the diversity of cultures and perspectives within the workforce.

    very good article. well done!

    ReplyDelete
    Replies
    1. Iresha UdariApril 21, 2023 at 1:39 AM

      Thank you for your detailed comment and the thoughts you have shared in this article.

      Delete
  5. Tharanga JayasundaraApril 20, 2023 at 9:14 AM

    Great work !

    Employing people from other countries brings in individuals with diverse viewpoints because they came from totally different locations. The finest conceivable recipe for ingenuity and innovation that may propel a firm to new heights is the mingling of thoughts and viewpoints from many cultures.

    ReplyDelete

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